Investments Needed to Capture Gas, Not Flare It: N. Dakota Governor

Bloomberg BNA — With new rules that took effect June 1, North Dakota is aiming to reduce flaring, the burning of natural gas that cannot be used or sold, to 10 percent of natural gas produced at the wellhead, Gov. Jack Dalrymple (R) said June 12.

Addressing fellow governors at the 2014 annual meeting of the Western Governors' Association, Dalrymple said he was “embarrassed to say” oil and gas companies currently flare about one-third of the roughly 1 billion cubic feet of gas they produce a day in North Dakota's Bakken shale play.

“The problem is the play is not for natural gas, it's for oil,” Dalrymple said during a panel session on Western oil and gas development. Oil is worth more and the infrastructure needed to capture natural gas requires “investments that are hard to put into place,” he said.

He said ONEOK Partners of Tulsa, Okla., has made a $6 million investment in North Dakota to capture more natural gas at wellheads. “We would like to have more natural gas to move to the eastern side of the state,” he said.

The rule approved by the North Dakota Industrial Commission requires producers to have gas capture plans for all applications for permit to drill (APDs) after June 1. Dalrymple said the goal is to have the industry achieve a 90 percent gas capture rate by 2020.

The panel on oil and gas also featured Al Walker, chief executive officer of Anadarko Petroleum Corp., who spoke about the “tremendous amount of change hydraulic fracturing and horizontal drilling” have brought to the industry.

‘Truly Remarkable.’

“We didn't see it coming. It's been truly remarkable,” he said. “The emergence of natural gas in particular allows us to do some things socially, politically and economically, not just in the United States, but in other countries throughout the world.”

Walker said in Colorado, Anadarko's employment has risen by 28 percent since the boom began. “We have increased production by 50 percent in Colorado, Wyoming and Utah, generating enough new energy to power 10 million homes,” he said.

Walker said the company wants to be known as a good steward of the environment. “We are working to ensure our operations don't compete with greater sage-grouse habitat, and we are producing a clean-burning fuel,” he said. “Every barrel produced here is one we don't have to import.”

Conflict Over Local Rules

Addressing the recent conflict in Colorado and elsewhere over state regulation of drilling and the desire of some local communities to have more say over production, Walker said, “We want to harmonize what we are doing and what the citizens of the state want.”

Walker was joined by Ben Fowke, chief executive officer of Xcel Energy, which provides power in eight western states and is the “number one provider of wind energy” in the U.S.

Fowke said by retiring coal power plants in the Denver metro region, Xcel will achieve a projected systemwide reduction in carbon dioxide emissions since 2005 of 35 percent by 2020.

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